Best current accounts: Top five bank accounts for switching with rewards

The New Year initially brought with it a handful of lucrative account switcher offers worth up to £175.

Switching is something many of us put off, with a third of customers sticking with the same old bank we opened our first account with, despite bad service, hefty fees and little reward for our loyalty. 

But moving to a better deal could help get your finances back on track in 2020. 

Switching is easy, meaning there is no excuse for staying put. You can find out our favourite accounts and how to switch hassle-fee below. However, the coronavirus means banks are not in the business of trying to attract new customers with bumper switch bonuses, and many have cut their in-credit interest too.

Alternatively you can click through to read our in depth guides to the best banks according to how you use your account:

We have also compiled an easy to read table of the best accounts across the board.  

Best account for in-credit interest… Nationwide

There are a few banks offering in-credit interest. Some offers come without a time limit or interest on larger balances so which deal is best for you will depend on individual circumstances, but Nationwide is offering the highest available interest rate on a current account. 

Nationwide’s FlexDirect account pays out 2 per cent on balances up to £1,500 for the first year – not bad considering most easy-access savings rates have slid in recent years. 

You must pay in a minimum monthly income of £1,000. On the last day of every month Nationwide will calculate the interest you’ve earned each day and then pay you this interest on the first day of the next month. 

Accountholders are also eligible for a 0 per cent overdraft for the first 12 months, after that you pay a whopping 39.9 per cent, so make sure you are back in the black before then. 

Watch out

If your income drops and you can’t pay in £1,000, you won’t receive any interest that month.

The 2 per cent interest deal ends after a year, when it drops to just 0.25 per cent. So it may be worth looking elsewhere after the 12 months for a better return on your money.

You get an interest-free arranged overdraft for that 12 months, but after that overdraft fees are hefty.

Recent changes to its overdrafts mean customers will now pay a flat rate of 39.9 per cent interest when overdrawn, this will be costly for those who regularly stray into the red. 

This is Money verdict

Accounts that are good for both in-credit and overdrawn customers are few and far between so this could be a good bet for those who have smaller balances – but can afford to pay in £1,000 each month, while the account still offers those benefits. 

Best account for rewards… NatWest

NatWest and its stablemate RBS revamped their reward accounts in February. Now, they pay a maximum of £5 a month in rewards, so £60 a year.

£4 of this comes from setting up two direct debits a month of at least £1 each, while the other £1 comes from logging into mobile banking at least once a month.

The account also offers 1 per cent cashback rewards at certain partner retailers when you use the debit card for paying for things.

Watch out

The account comes with a £2 monthly fee which cuts into your monthly cashback, while the overdraft charges are also among the most expensive around. 

It currently charges 19.89 per cent, with a £6 monthly usage fee. This is due to change on 6 April to a similarly expensive rate of 39.49 per cent, but will be delayed due to coronavirus.

This is Money verdict

Cashback and reward bank accounts have taken a hit over the last few years, and NatWest’s is no exception. It isn’t as generous as it used to be, when it paid out an average of £83 in the form of bills cashback.

But at the moment, it’s one of the best out there, and it isn’t as costly as Santander’s 123 current account. But you get less back for your money as a result. 

Best account for interest on a large balance… Lloyds

With cuts to Santander’s 123 account coming in on 5 May and again on 3 August, Lloyds Bank’s Club Lloyds account is now probably a better offer, although the 123 account still offers up to 3 per cent cashback.

Club Lloyds pays 1 per cent on interest on balances of up to £3,999, while those with sums of between £4,000 and £5,000 will earn 2 per cent on that balance. This works out at £60 interest if customers kept in the full £5,000 for a year, an interest rate of around 1.2 per cent. 

Overdrafts are charged at 29.9 per cent after a £50 interest-free buffer.

There is no monthly fee if you pay in £1,500 a month, otherwise it charges £3. 

This is Money verdict 

Cuts to current account interest mean the blended rate of around 1.2 per cent you can get from Club Lloyds on £5,000 is the best rate you can get on balances above £1,500.

The rate itself is tied as the best easy-access rate around at the moment, meaning you’d only earn the same sum if you wanted to stash it elsewhere. But if you have more than £5,000 burning a hole in your pocket, you should earn the same rate with another savings bank elsewhere.